Nigerian Banks must deploy technology to adapt to regulatory changes and risk management

Nigerian Banks must deploy technology to adapt to regulatory changes and risk management

As one of the most regulated industries in the world, banks are under pressure to not only comply with constantly changing regulations but also to modernise their systems, so that they can reduce compliance costs, improve efficiency and effectiveness in risk management processes, stay competitive in the age of the FinTech, and be innovative on risk assessments during new product development, to better serve their customers. This assertion was made at the SAS Risk & Finance Analytics Roadshow in Lagos.
Speaking at the event, Senior Business Solutions Manager, Pre-Sales Risk Practice, SAS Charles Nyamuzinga noted that banks in Africa face additional challenges, including risk analytics skills shortages, data management issues and integrating their risk management and finance processes across the enterprise. But, on the positive side, they have started considering technology as a way of eliminating these challenges and have access to new streams of data that are also helping to advance the financial inclusion mandate.
SAS, a leading global analytics firm, as a technological partner for banking institutions has always played a proactive role in fostering innovation and transformation of processes and systems, from regulatory compliance to strategic decisions support, from digitisation to risk assessment in real-time and also providing analytics solutions allow banks to adapt more quickly to regulatory changes minimising costs.
Recent regulatory changes in the banking industry means that banks across Africa should already be compliant with the new IFRS 9 accounting standard, which changes the way they calculate expected credit losses. There is also need to start thinking about the new ‘Basel IV’ framework, which impacts on how banks calculate their risk weighted assets and the amount of capital they need to offset those risks. Other issues which banks are currently grappling with include incorrect modelling caused by data management and quality issues, skills shortages, drawing data from a number of disparate systems, credit loss calculations, and risk modeling amongst other issues.
According to him, “with solutions like SAS’s Risk and Finance Platform, none of these challenges are major issues anymore. Bundled with data management, risk calculations, scenario management and reporting capabilities, SAS solutions are easy to use through a simple drag-and-drop or point-and-click interface. From a single platform, Risk and Finance departments can access the same datasets, populated with data that has been scrubbed, scrutinized and validated, perform calculations and produce reports, so that executives can make confident business decisions.”
Banks can trust that the information they’re using to build their risk and credit models is reliable and that the reports they generate are automatically compliant with regulatory requirements and can easily adapt to regulatory changes as and when they happen, Charles said.
He however said, banks need to modernise and integrate their risk management systems if they hope to stay relevant in a rapidly changing market. Compliance is no longer their single biggest consideration. “Banks should also take into account cost reductions as well as high performance, efficiency and governance issues in risk and compliance processes. They need to adopt advanced analytics solutions that are multi-tenancy in terms of risk management use cases and cover the entire risk management process, from data management, risk analytics and reporting, to meeting governance and controls requirements”.